/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q.14.60 Following are the age and price ... [FREE SOLUTION] | 91Ó°ÊÓ

91Ó°ÊÓ

Following are the age and price data for custom homes, use α=0.01

presuming that the assumption for regression inference are met, decide at the specified significance level whether the data provide sufficient evidence to conclude that the predictor variable is useful for providing the response variable.

Short Answer

Expert verified

The data provide sufficient evidence to conclude that the slope of the population regression line is not 0and hence the variable, x is useful as a predicator of price y for custom homes.

Step by step solution

01

Given Information 

Given table is

and, α=0.01. we have to find out whether the data provide sufficient evidence to conclude that the predictor variable is useful for providing the response variable.

02

Explanation 

STEP -1: The null and alternative hypothesis are

H0:β1=0

Hα:β1≠0

STEP 2: Determine theαsignificance level.

The hypothesis test should be run at a significance level of 1percent, or α=0.01

Table of computations:

Sxy=∑xiyi-∑xi∑yi/n=169993-(270)(5552)/9=3433

Sxx=∑xi2-∑xi2/n=8316-(270)2/9=216

The total sum of square SST is calculated by

Syy=∑yi2-∑yi2/n=3504412-(5552)2/9=3504412-30824704/9=79444.88889

The regression sum of square is calculated by

SSR=Sxy2Sxx=(3433)2216=54562.44907

SSE=SST-SSR

SSE=79444.88889-54562.44907=24882.43981

The formula of standard error is

se=SSEn-2=24882.439819-2≈59.621

STEP-3 The formula of test stastic is

t=b1se/Sxx=15.8935185259.6207536/216≈3.92

STEP-4

df=n-1=9-2=7

The critical values are ±tα/2=±t0.005=±3.500, as determined by technology.

Or STEP 4: The test statistic's value is t=3.92as of Step 3. The P-value is the probability of seeing a value oftof3.92or larger in magnitude if the null hypothesis is true, because the test is two-tailed. We derive the p=00.5765using technology.

STEP 5: The test statistic's value is smaller than the critical value. Our null hypothesisH0t=3.92<0.005,7=3.500, i.e. is rejected. Our null hypothesisH0is not rejected.

STEP 6: The data give sufficient evidence at the 1% significance level to infer that the slope of the population regression line is not 0,and so the variable xis significant.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91Ó°ÊÓ!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

To find and interpret a confidence interval , at the specified confidence level 99%for the slope of the population regression line that relates the response variables to the predictor variable.

In Exercises 14.70-14.80, use the technology of your choice to do the following tasks.

a. Decide whether you can reasonably apply the regression t-test. If so, then also do part (b).

b. Decide, at the5% significance level, whether the data provide sufficient evidence to conclude that the predictor variable is useful for predicting the response variable.

PCBs and Pelicans.

Use the data points given on the WeissStats site for shell thickness and concentration of PCBs for 60 Anacapa pelican eggs referred to in Exercise 14.40.

14.22 Tax Efficiency. Tax efficiency is a measure ranging from 0 to 100 - of how much tax due to capital gains stock or mutual funds investors pay on their investments each year, the higher the tax efficiency, the lower the tax. The paper "At the Mercy of the Manager" (Financial Planning, Vol. 30(5), pp. 54-56 ) by C. Israelsen examined the relationship between investments in mutual fund portfolios and their associated tax efficiencies. The following table shows the percentage of investments in energy securities (x)and tax efficiency (y)for 10 mutual fund portfolios.

What statistic is used to estimate

a. The y-intercept of the population regression line?

b. The slope of the population regression line?

c. The common conditional standard deviation, σ, of the response variable?

In each of Exercises 14.64-14.69, apply Procedure 14.2 an page 567 to find and interpret a confidence interval, at the specified confidence level for the slope of the population regression line that relates rite response variable to the predicter variable.

Study Time and Score. Refer to Exercise 14.63; 99%.

See all solutions

Recommended explanations on Math Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.